HONG KONG, Jan 26 (Reuters) - China's HNA Group said it had reached a deal to sell a building in Sydney for A$205 million ($166 million), in what is the latest in a series of measures taken by the aviation-to-financial services conglomerate to address a liquidity crunch.

The sale comes as HNA faces financing strains following a $50 billion acquisition spree over the past two years, which has sparked scrutiny of its opaque ownership and use of leverage.

HNA's real estate unit, Hong Kong International Investment Group Co, said in a statement on Friday that it had sold an office building located on 1 York Street in Sydney, confirming what two sources had told Reuters earlier in the day.

HNA, which added that it had earned A$88 million from the sale, did not name the buyer. But the sources, who have direct knowledge of the deal, identified the buyer as a unit of U.S.-based private equity firm Blackstone Group.

Blackstone declined to comment on news of the sale, which was first reported by Bloomberg.

HNA has over the past few months focused on scaling-back its offshore real estate investments, which Beijing has targeted with capital controls. Group CEO Adam Tan has said the company would not invest in areas that were not backed by the central government.

Zhao Quan, a board director, told Reuters last month HNA would sell 1180 6th Avenue in New York and was reviewing its overseas assets.

The Sydney property was a mature investment, the HNA unit said today, and the firm will continue to adjust its asset allocation moving forward.

Earlier this week, HNA Investment Group Co announced that it had terminated its plan to create a real estate investment trust in Singapore.

The group has also walked away from anticipated deals, such as a bid to buy Value Partners Group, the Hong Kong-listed asset manager.

With respect to existing investments, HNA is looking to reduce exposure in some by seeking partners and selling shares.

It is in talks with a number of developers and private equity firms for co-investments in its multi-billion dollar Hong Kong development project, according to people familiar with the matter. The group did not immediately comment on the situation.

The group's borrowing, including bank loans and bonds, surged more than a third in the first 11 months of 2017 to 637.5 billion yuan ($101 billion), a China bond market filing shows. ($1 = 6.3180 Chinese yuan renminbi) ($1 = 1.2373 Australian dollars) (Reporting by Kane Wu; Editing by Himani Sarkar)